Though Mr. de Toledano died in February, a federal judge in the District has permitted his sons to take over as plaintiffs in the lawsuit. In a 42-page ruling Friday, the judge also ordered the dispute into arbitration and refused to move the case to California.

The lawsuit states that W. Mark Felt Jr. offered to buy Mr. de Toledano’s rights to a 1979 memoir he co-wrote with the elder Mr. Felt, citing plans to release a second book with additional background.

Mr. de Toledano held a 50 percent interest in the memoir and royalty rights from any additional commercial works on Mr. Felt’s life.

Unaware that the senior Mr. Felt was the famous Watergate source, Mr. de Toledano tentatively agreed, but later said he never would have done so if he knew the Felts and their attorney soon planned to disclose the senior Mr. Felt’s role as the famous Watergate source Deep Throat, the lawsuit states. Mr. Felt had long denied being Deep Throat.

The sons argued through an attorney on numerous legal grounds against the validity of an arbitration clause in the disputed agreement, in which the author purportedly signed over his rights to the book, “The FBI Pyramid From the Inside.”

First, they said, no contract existed because Mr. de Toledano withdrew from the deal. The sons also argued that the arbitration agreement cannot be enforced because it arose from fraud. In addition, they said, arbitration would be too expensive.

The crux of the fraud claim, according to the author’s lawsuit, is the Felts and John O’Connor, their attorney, sought to buy out Mr. de Toledano’s rights in the book to reap the financial windfall from their plans to disclose Deep Throat’s identity. The Felts and Mr. O’Connor have disputed the accusations and denied any wrongdoing.

Mr. O’Connor ended the three-decade mystery over the identity of the Deep Throat source to The Washington Post reporters Bob Woodward and Carl Bernstein. Mr. O’Connor’s Vanity Fair article, which received substantial advance publicity, led to a book and talks of a movie deal.

Although the deal called for Mr. de Toledano to receive $10,000, he ultimately sued on the grounds that his interest in Mr. Felt’s story was far more valuable once the former FBI official came out as Deep Throat.

According to the lawsuit, there was “little or no doubt that the story of Washington’s most celebrated secret source would have considerable commercial value.”

Judge Bates ruled that a binding contract between Mr. de Toledano and the Felts existed as of Sept. 7, 2003, the date when the author stated in a letter to Mr. O’Connor, “I accept Mark’s proposal as outlined in your letter.”

The judge also disagreed with claims by Mr. de Toledano’s estate that the author was tricked into agreeing to an arbitration clause.

However, the judge also said his ruling pertained only to the issue of whether the dispute should go to arbitration. Judge Bates said he was expressing no opinion about the underlying merits of the lawsuit in his ruling.

In addition, Judge Bates refused a request by Mr. O’Connor and the Felts to transfer the lawsuit to California. In pretrial motions, defense attorneys argued that the senior Mr. Felt lives in Santa Rosa, Calif., and is too ill to travel.

Judge Bates, ruling to keep the case in the District, said depositions can be handled by video and court papers can be filed electronically.